Commerce opens a Section 232 national security investigation into pharmaceutical imports

On April 1, 2025, the U.S. Secretary of Commerce opened a Section 232 national security investigation into imports of pharmaceuticals and pharmaceutical ingredients — the same statute previously used for steel, aluminum and auto parts ^[1]. At the time it looked like a technical trade action. It became the legal foundation for a 100% tariff on many imported brand-name drugs and the lever the administration used to push drugmakers, including the companies behind semaglutide and tirzepatide, into pricing agreements.

What the investigation found

The probe concluded that pharmaceutical imports threaten to impair U.S. national security ^[1]. Its central numbers: according to the Food and Drug Administration, as of 2025 about 53 percent of patented pharmaceutical products distributed in the United States are produced outside the country, and only 15 percent of patented active pharmaceutical ingredients by volume are made domestically for the U.S. market ^[2]. The report also found that foreign government intervention had undermined the competitiveness of the U.S. patented drug industry ^[2].

Commerce recommended three things: keep negotiating onshoring agreements tied to Most-Favored-Nation (MFN) drug pricing, impose significant tariffs, and give preferential treatment to companies that commit to move production to the United States ^[2].

From investigation to tariffs

On April 2, 2026, the President signed a proclamation acting on that report. The default rate is a 100 percent ad valorem duty on patented pharmaceuticals and associated ingredients listed in the proclamation's Annex I ^[2].

The rate structure is tiered. Companies with onshoring plans approved by the Secretary of Commerce pay 20 percent, a rate that jumps to 100 percent on April 2, 2030 ^[2]. Companies that qualify for that 20 percent tier and have signed MFN pricing agreements with the Secretary of Health and Human Services pay zero until January 20, 2029 ^[2]. Products from Japan, the European Union, South Korea, and Switzerland and Liechtenstein face 15 percent; the United Kingdom faces 10 percent, which could drop to zero under a future pricing agreement ^[2]. Generic drugs and biosimilars were not tariffed at this time ^[2].

Running alongside the trade case was a pricing campaign. A May 12, 2025 executive order directed HHS to ensure Americans pay no more for prescription drugs than consumers in other developed countries ^[1]. On July 31, 2025, the White House sent letters to seventeen manufacturers — including Novo Nordisk and Eli Lilly — demanding MFN pricing in Medicaid, MFN prices for all new drugs, and participation in direct-purchasing programs, with a sixty-day compliance window ^[1].

Lilly reached an agreement with the administration on November 6, 2025: three years of relief from the coming Section 232 tariffs in exchange for MFN pricing on key drugs and major U.S. manufacturing investment ^[1]. Under the announced terms, state Medicaid programs get access to MFN prices, Medicare covers key obesity drugs for the first time at a lower cost, and Lilly offers medicines including its obesity treatments at discounts directly to American patients ^[1]. Lilly says it is investing more than $50 billion in U.S. manufacturing ^[1], including a Lebanon, Indiana campus that produces active ingredients for tirzepatide, the molecule in Mounjaro and Zepbound ^[1].

Why it matters for patients

For people taking or considering GLP-1 drugs, the practical link is this: the tariff threat is what made pricing concessions worth making. The zero-tariff tier required an MFN pricing agreement with HHS ^[2], and the Lilly agreement that followed included direct-to-patient discounts on obesity drugs and first-time Medicare coverage of key obesity medicines ^[1].

The tiers are also time-limited. The zero rate expires January 20, 2029, and the 20 percent onshoring rate rises to 100 percent on April 2, 2030 ^[2]. What that means for list prices, cash-pay programs or insurance coverage after those dates is not spelled out in these documents.

Several things are not yet known from these sources: whether specific semaglutide or tirzepatide products appear on the tariffed annex lists, and what terms Novo Nordisk — which received an MFN letter ^[1] — ultimately agreed to.

What happens next

The proclamation directs Commerce and HHS to keep negotiating agreements and to report on progress within 90 days of April 2, 2026 ^[2]. It also notes that if an agreement is not entered into within 180 days, is not carried out, or proves ineffective, the President may take further action ^[2].